Dr. Wish

We shall now learn whether this market can hold up after the funds finish their end of quarter window dressing on Thursday. The GMI remains on Sell and IBD still sees market in correction. The QQQ has rebounded to its key declining weekly moving averages. It will be interesting to see if the QQQ now hits a brick wall. Check out this weekly chart.

This market still looks to me like a Stage 4 down-trend. It will take more than a low volume bounce to convince me that the worst is over. I am in cash in my trading account and going to cash in my university pension. There is plenty of opportunity to profit by owning stocks when an up-trend is evident. The name of the game is to conserve one’s capital.

The market is so oversold with 87% of NASDAQ 100 stocks trading at or below their lower 15.2 Bollinger Band on Monday. Futures portend a bounce this morning. But I am going to cash, given the GMI is now at a Sell.  This weekly chart of the QQQ suggests an ominous Stage 4 decline. The 30 week average (red line) has clearly topped out.

Today’s bounce may be caused by the mutual fund window dressing at the end of the second quarter. Once the quarter ends, early July could be nasty as earnings come out and everyone blames Brexit for their reduced earnings expectations for the rest of the year.